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Tencent, Baidu reveal how they’re dealing with U.S. AI chip curbs

admin — Tue, 27 May 2025 05:21:24 +0000

Niphon | Istock | Getty Images

Tencent and Baidu, two of China’s largest technology companies, revealed how they’re keeping in the global artificial intelligence race even as the U.S. tightens some curbs on key semiconductors.

The business’ methods include stockpiling chips, making AI models more efficient and even using homegrown semiconductors.

While the administration of U.S. President Donald Trump scrapped one controversial Biden-era chip rule, it still tightened exports of some semiconductors from companies including Nvidia and AMD in April.

Big names in the sector addressed the issue during their latest earnings conference calls.

Martin Lau, president of Tencent — the operator of China’s biggest messaging app WeChat — said his company has a “pretty strong stockpile” of chips that it has previously purchased. He was referring to graphics processing units (GPUs), a type of semiconductor that has become the gold standard for training huge AI models.

These models require powerful computing power supplied by GPUs to process high volumes of data.

But, Lau said, contrary to American companies’ belief that GPU clusters need to expand to create more advanced AI, Tencent is able to achieve good training results with a smaller group of such chips.

“That actually sort of helped us to look at our existing inventory of high-end chips and say, we should have enough high-end chips to continue our training of models for a few more generations going forward,” Lau said.

Regarding inferencing — the process of actually carrying out an AI task rather than just training — Lau said Tencent is using “software optimization” to improve efficiency, in order to deploy the same amount of GPUs to execute a particular function.

Lau added the company is also looking into using smaller models that don’t require such large computing power. Tencent also said it can make use of custom-designed chips and semiconductors currently available in China.

“I think there are a lot of ways [in] which we can fulfill the expanding and growing inference needs, and we just need to sort of keep exploring these venues and spend probably more time on the software side, rather than just brute force buying GPUs,” Lau said.

Baidu’s approach

Baidu, China’s biggest search company, touted what it calls its “full-stack” capabilities — the combination of its cloud computing infrastructure, AI models and the actual applications based on those models, such as its ERNIE chatbot.

“Even without access to the most advanced chips, our unique full stack AI capabilities enable us to build strong applications and deliver meaningful value,” Dou Shen, president of Baidu’s AI cloud business, said on the company’s earnings call this week.

Baidu also touted software optimization and the ability to bring down the cost of running its models, because it owns much of the technology in that stack. Baidu management also spoke about efficiencies that allow it to get more out of the GPUs it possesses.

“With foundation models driving up the need for a massive computing power, the abilities to build and manage large scale GPU clusters and to utilize GPUs effectively has become key competitive advantages,” Shen said.

The Baidu executive also touted the progress made by domestic Chinese technology firms in AI semiconductors, a move he said would help mitigate the impact of U.S. chip curbs.

“Domestically developed self-sufficient chips, along with [an] increasingly efficient home-grown software stack, will jointly form a strong foundation for long-term innovation in China’s AI ecosystem,” Shen said.

China domestic chip focus

China has been ramping up development of chips designed and manufactured on its home soil for the last few years. Most experts agree that Beijing remains overall behind the U.S. in the realm of GPUs and AI chips, but there have been some advances.

Gaurav Gupta, an analyst covering semiconductors at Gartner, said stockpiling is one way Chinese companies are dealing with export restrictions. Additionally, there has been some progress made in semiconductor technology in China, even if it remains behind the U.S., Gupta added.

“China has also been developing its own domestic semiconductor ecosystem, all the way from materials to equipment to chips and packaging. Different segments have made varying levels of progress, but China has been surprisingly extremely consistent and ambitious in this goal, and one must admit that they have achieved decent success,” Gupta told CNBC by email.

“This provides an avenue for them to procure AI chips, which perhaps can’t compete with those from the U.S chip leaders but continue to make progress.”

Many U.S. executives have urged Washington to scrap export restrictions in light of China’s progress. Nvidia CEO Jensen Huang called the curbs a “failure” this week, saying they are doing more damage to American businesses than to China.

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Pony.ai teams up with Tencent for robotaxi services on WeChat, other apps

admin — Sat, 26 Apr 2025 06:21:27 +0000

A Pony.ai autonomous car.

Pony.ai

Chinese start-up Pony.ai said Friday it will develop autonomous driving technology in partnership with Tencent Cloud and offer robotaxi services on tech giant Tencent’s WeChat and other applications.

The Nasdaq-listed company which specializes in autonomous vehicle technology, particularly robotaxis and robotrucks, said in a press release that the deal will include cooperation in areas such as cloud services, map data, information security and intelligent cockpit ecosystems.

The arrangement will also see the two companies integrate Pony.ai’s robotaxi ride-hailing services within Tencent’s popular WeChat app as well as other applications like Tencent Maps.

Both companies had been in talks “for quite some time,” Pony.ai CEO James Peng told CNBC on the sidelines of the Shanghai Auto Show on Friday. He cited Tencent’s huge user base and its cloud offerings as factors supporting the “win-win” collaboration as the start-up continues to scale up.

Following the partnership, Peng said that “hopefully in the near future,” users would be able to call Pony.ai robotaxi rides straight through the WeChat app.

WeChat is known as the world’s most popular ‘super app,’ housing everything from messaging to payment transactions to food delivery services, with a monthly user base of over 1 billion people.

“Pony.ai possesses industry-leading autonomous driving technology accumulations, while Tencent excels in cloud services, mapping, and cockpit ecosystem technologies,” Vice President of Tencent Group and President of Tencent Smart Mobility Zhong Xiangping was quoted as saying in the Friday release.

“This strategic partnership between the two parties is not only about complementing each other’s technologies and resources but also marks a new starting point for collaborative innovation,” he added.

The release said that the partnership would also see both companies collaborate on the development, testing, and operation of Robotaxis, particularly in L4-level autonomous driving.

According to SAE International, L4 is a type of autonomous driving that allows drivers to take their eyes off the road in designated areas. For comparison, L3 is considered a hands-off system, but drivers must actively monitor the vehicle and be ready to take over the wheel.

The Tencent Cloud agreement comes a day after it was reported that Pony.ai unveiled its L4, seventh-generation robotaxi solution at the Shanghai Auto Show on Wednesday. The company’s shares surged about 40% in the U.S. on Thursday.

The start-up continues to establish itself as a prominent player in China’s autonomous driving industry. The company obtained China’s first permit to charge fares for fully driverless taxis in core parts of a business district of Shenzhen, where Tencent is headquartered.

However, the firm may be implicated in increasing trade tensions between China and the U.S. as the latter is a market Pony.ai considers “hugely important” to its expansion plans.

James Peng, co-founder and chief executive of Pony.ai this week reportedly told the Financial Times that the company is considering a secondary listing outside the U.S. amid mounting concerns that Washington will push for the delisting of Chinese companies off the New York Stock Exchange.

If this were to happen, it would come less than six months after the company’s initial public offering in the U.S. Notwithstanding, Peng told FT that a lot of factors need to be considered.

— CNBC’s Nur Hikmah Md Ali contributed to this story.

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U.S. Adds Tencent to Chinese Military Companies Blacklist

admin — Tue, 07 Jan 2025 11:17:49 +0000

The Pentagon on Monday labeled Tencent, the Chinese social media and gaming giant, as a Chinese military business operating in the United States, the latest action in an escalating series of retaliatory moves between the world’s two superpowers.

Tencent’s shares in the United States plunged by nearly 10 percent after the decision by the Defense Department, which also targeted Chinese battery, drone and shipping companies.

The Defense Department updates annually a list of what it designates as “Chinese military companies,” entities it has identified as having both military and commercial technology. There are now 134 companies on the list, which was posted to the Federal Register. It also added Contemporary Amperex Technology Company, known as CATL, as well as China Overseas Shipping, known as COSCO; the chipmaker Changxin Memory Technologies; and the drone maker Autel Robotics. China Overseas Shipping is China’s largest shipping line and one of the biggest in the world.

Putting Tencent on the list was “clearly a mistake,” a spokeswoman for the company said in an emailed statement. “We are not a military company or supplier.”

Tencent also said that the listing would have “no impact on our business,” and that it would “work with the Department of Defense to address any misunderstanding.”

The designation is a warning to businesses in the United States that working with companies on the list could get them barred from future Pentagon contracts.

To be added to the list, a company must have some business operations within the United States. For example, CATL is licensing its battery technology to the American carmaker Ford Motor, which is building a $3.5 billion electric vehicle factory in Michigan.

A spokesman for CATL said the company had “never engaged in any military-related business or activities,” adding that the designation “does not restrict CATL from conducting business with entities other than the Department of Defense and is expected to have no substantially adverse impact on our business.” CATL planned to dispute being added to the blacklist and said it could consider legal action.

Other companies added to the list did not immediately respond to requests for comment.

As tensions between the United States and China have escalated in recent years, pressure has been growing from lawmakers to find ways to thwart China’s advances technologically and militarily.

In 2021, the Chinese consumer electronics company Xiaomi successfully sued the Pentagon to be removed from the blacklist after arguing in federal court that it had no ties to the Chinese military.

More recently, the countries have engaged in an escalating economic tit-for-tat. It began during the first term of President-elect Donald J. Trump, after he took aim at China with tariffs and restrictions on trade. At that time, Beijing took mostly symbolic and measured responses in retaliation.

Since then, the Biden administration has expanded its restrictions on Chinese companies and imposed bans on dual-use products, recently targeting 140 Chinese companies. On Thursday, the administration said it was considering a new rule that could restrict or ban Chinese drones in the United States.

Beijing has adopted an increasingly aggressive stance as it prepares for a second presidential term with Mr. Trump, an outspoken critic of China and its economic might.

Chinese regulators have announced an investigation into the American computer chip company Nvidia, banned the export of rare minerals to the United States and taken more targeted swipes at individual companies to expose their supply chain vulnerabilities.

Janet L. Yellen, the Treasury secretary, and her Chinese counterpart, He Lifeng, held a virtual meeting on Monday, their latest in a series intended to promote discussions between the countries’ economic policymakers. According to a readout from the Treasury Department, both sides aired concerns over rising economic tensions. Ms. Yellen warned that Chinese polices that affect American companies and workers would continue to have a harmful impact on the United States-China relationship, according to the readout.

Mr. He raised concerns about Washington’s economic and trade restrictions on China, Chinese state media reported.

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Tencent shares fall 8% in Hong Kong after U.S. designates it a Chinese military company

admin — Tue, 07 Jan 2025 07:56:46 +0000

Jonathan Raa | Nurphoto | Getty Images

Shares of Chinese tech heavyweight Tencent Holdings tumbled nearly 8% in Hong Kong after the company was added to a list of “Chinese military companies” by the U.S. Department of Defense.

The move mirrors an 8% fall in Tencent’s U.S. depository receipts on Wall Street.

Other Chinese companies added to the list included battery maker CATL, which is part of the supply chain for automakers such as Ford and Tesla.

CATL shares, which fell as much as 5.6%, were last down 2.8% in Shenzhen.

The National Defence Authorization Act of 2024 says that the DoD will be prohibited from procuring goods or services directly from entities on the list in June 2026, and indirectly from June 2027.

In response to the decision, Tencent said in a statement that its inclusion on the list was “clearly a mistake.”

“We are not a military company or supplier. Unlike sanctions or export controls, this listing has no impact on our business,” the company added. CATL also called the designation “a mistake” in a response, saying it “is not engaged in any military related activities.”

Tencent has a good chance of managing to secure its exclusion from the list through U.S. courts due to the company’s business model, which primarily revolves around social networking and online gaming, said Ivan Su, senior equity analyst at Morningstar.

He pegs the fair value for Tencent shares at 704 Hong Kong dollars apiece, with represents an 86.14% upside to the current share price of HK$378.2.

Separately, Vincent Su, also senior equity analyst at Morningstar, said that CATL being included in the list “may discourage U.S. customers from purchasing the company’s energy storage system, or ESS, batteries in the future.”

The U.S. has been taking steps to restrict transfer of high-end technologies to China. Last year, it revoked certain licenses to sell chips to China’s Huawei in May and unveiled new sweeping export controls on critical technologies in September, including quantum computing and semiconductor goods.

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